Mar WTI crude oil (CLH23) this morning is down -0.79 (-0.98%), and Mar RBOB gasoline (RBH23) is down -2.60 (-0.99%). Â Feb Nymex natural gas (NGG23) is down -0.034 (-1.55%).
Crude oil and gasoline prices this morning gave up an early advance and are moderately lower. Â A stronger dollar today is undercutting energy prices. Â Also, technical selling pressured prices as long liquidation emerged today after crude failed to take out Monday's 1-week high.
Feb nat-gas this morning is moderately lower and is just above Thursday's 1-3/4 year low. Â Updated weather forecasts today have generally shifted warmer for most of the U.S. starting Feb 1, which will reduce heating demand for nat-gas. Â Also, a report today from Rystad Energy weighed on crude prices when Rystad said nat-gas prices might fall to as low as $2 per million British thermal units in the next few months as rising supplies are poised to outpace demand.
Today's U.S. economic data was mixed for energy demand and crude prices. Â On the bearish side, Dec personal spending fell -0.2% m/m, the biggest decline in a year. Â Conversely, Dec pending home sales unexpectedly rose +2.5% m/m, stronger than expectations of -1.0% m/m and the biggest increase in 14 months. Â Also, the University of Michigan U.S Jan consumer sentiment was revised up by +0.3 to a 9-month high of 64.9. Â
Increased travel and consumer spending in China during the week-long Lunar New Year holiday is bullish for crude prices. Â The holiday period saw tourism rebound in Hong Kong and Macau, with 40,000 mainland visitors arriving in Macau on the second day of the holiday, the most since the start of the pandemic.
China boosted its crude import quotas earlier this month, a sign from the world's largest crude importer that it is gearing up to meet higher demand. Â As of last week, China has issued a combined 132 million metric tons (MMT) of quotas for crude imports in 2023, well above the quota for 109 MMT at the same time last year. Â Â Â
Delegates from OPEC+ said the group would maintain its crude production targets at current levels when they meet on Feb 1, as they await clarity on the recovery in consumption in China and the impact of sanctions on Russian crude supplies. Â Goldman Sachs predicts that OPEC+ will only start to reverse its supply cuts, currently about 2 million bpd, in the second half of this year when accelerating demand will tighten the market.
In a bullish factor, Vortexa reported Monday that the amount of crude stored on tankers that have been stationary for at least a week fell -1.2% w/w to 86.77 million bbl in the week ended January 20.
Increased OPEC crude output is bearish for oil prices. Â OPEC Dec crude production rose +150,000 bpd to 29.140 million bpd. Â OPEC+ on December 4 decided to keep the group's crude production targets unchanged for January, in line with expectations. Â OPEC+ will meet again on February 1 to discuss its production targets.
Wednesday's EIA report showed that (1) U.S. crude oil inventories as of January 20 were +2.5% above the seasonal 5-year average, (2) gasoline inventories were -7.7% below the seasonal 5-year average, and (3) distillate inventories were -19.6% below the 5-year seasonal average. Â U.S. crude oil production in the week ended January 20 was unchanged w/w at 12.2 million bpd, which is only 0.9 million bpd (-6.9%) below the Feb-2020 record-high of 13.1 million bpd.
Baker Hughes reported last Friday that active U.S. oil rigs in the week ended January 20 fell by -10 rigs to 613 rigs, below the 2-1/2 year high of 627 rigs posted on December 2. Â U.S. active oil rigs have more than tripled from the 17-year low of 172 rigs seen in Aug 2020, signaling an increase in U.S. crude oil production capacity.
More Natural Gas News from Barchart
- Nat-Gas Prices Sink Amid Mild Winter Weather
- Crude Gains on Signs of Stronger Global Energy Demand
- Nat-Gas Prices Tumble as U.S. Weather Forecasts Shift Warmer
- Crude Pushes Higher on Smaller EIA Inventory Build
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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